In his maiden budget presentation before parliament in November last year, Finance Minister, Mthuki Ncube bemoaned the fact that companies like Netflix provided services in Zimbabwe but did not pay taxes locally. In his Mid Term budget review, the minister has repeated this thinking:
Income earned in Zimbabwe by foreign domiciled satellite broadcasting services and electronic commerce platforms is deemed to be from a source in Zimbabwe for tax purposes.
However, technological advancements have enabled the development of other electronic commerce platforms, which facilitate the utilisation of digital media services and content. Such platforms are not covered within the definition of satellite broadcasting services.
I, therefore, propose to extend the scope of revenues deemed to be from a source in Zimbabwe for tax purposes to include amounts received by or on behalf of a radio or television broadcaster domiciled outside Zimbabwe or an electronic commerce operator domiciled outside Zimbabwe.
Still nothing concrete and we know why
The above is the only mention of this tax on Netflix et al. The problem is it is very difficult to effect such a tax without the cooperation of the global companies themselves. Getting that cooperation is very tricky because Zimbabwe is a very insignificant market for these services. Why would they go through the hurdles of complying when they can just remove Zimbabwe from the list of countries their services can be accessed from? Nanhasi (up to now) Spotify is not available in Zimbabwe…
The best option for the minister is to just introduce a tax similar to his 2% tax, only that this time it will be levied on us whenever we use locally issued cards to pay online. He has done it before, he will probably do it again because he seems to particularly want a piece of the few thousands that are going to Netflix.
He is right though
Is the minister right? Yes he is. These global players are reaping our subscription fees and whatever we spend on their platforms. The right thing for them to do is to pay taxes to our government. Even South Africa has gone down this path.
However, right as it may be, it is probably not going to happen any time soon unless the tax is added as an extra cost to you and I just like the 2% tax.